I need to tell you guys a secret. And that secret is discount gift cards.

This week I bought Urban Outfitters gift cards totaling $350 for just $269.50. On top of that, through this weekend, Urban Outfitters is offering $50 off orders of $150 or more – that means I can get $400 worth of merchandise for $269.50! I’ve had my eye on some furniture for my new apartment…

Let’s do a quick thought experiment…

Let’s say you buy a grande black Pike Place Roast at Starbucks every morning on the way to work. Let’s say that costs you $1.65 a day, five days a week, 47 weeks a year (assuming two weeks vacation, ten national holidays, and one week of sick time). That’s $387.75 per year.

Now let’s say that instead of paying cash for that coffee, you bought discount gift cards and registered them with your free Starbucks Rewards account. Next, if you create a Starbucks Rewards account, after 30 “stars” you’ll start earning one free drink for every 12 – which means 15 of those coffees are going to be on the house, bringing your total down to $363. As of this writing, you can buy $365 worth of discounted Starbucks gift cards on Raise and Cardpool for $324.63.

In other words, I just saved you $63 a year on coffee. You can thank me later.

If the store you’re looking for is currently sold out of discount gift cards, you can sign up for email alerts – but note that you’ll need to act IMMEDIATELY if you get an email. I’m signed up for email alerts for Forever XXI gift cards on Cardpool and whenever I get an email, the card is usually gone within 5-10 minutes.

Pay attention to whether you’re buying an electronic gift card or a physical card. Generally, both electronic gift cards and physical gift cards can be used to purchase things online, but electronic gift cards usually can’t be used to buy things in-store.

Physical gift cards will need to be shipped to you which may take a few days, and even electronic gift cards will often take a day to process before you’ll have access to the code, especially if you’re a first-time buyer. This is to protect the seller from fraud. Because of the delay, it’s smart to think ahead and buy gift cards for stores you know you’ll be shopping at instead of waiting until you need something.

It’s worth it to shop around – sometimes one of the gift card sites will have a radically better deal than another. You can usually sort the list of available gift cards in order of highest value or greatest discount. I’ve noticed that in general you can get a deeper discount if you’re buying a card with more money on it.

The more broadly appealing the card is, the less the discount will be. For example, a Visa gift card – which you can use almost anywhere – will usually sell for face value. The biggest discount I’ve seen is about 1.5%. Stores that sell pretty much everything like Walmart and Amazon will similarly have very low discounts – in the 1-3% range. Also stores like Apple that sell highly desirable, very expensive items will tend to have low discounts – I’ve seen mostly around 1%.

Note that if you use a discount gift card, you can combine it with a promo code and other sales for additional discounts. However, if you’re using a gift card, you can’t use a credit card, which means you won’t have access to any points or discounts you get from using your credit card. For example, discount Target gift cards usually only go for about 2-4% off – that’s not really worth it for me because I have a Target RED card which gives me 5% off every purchase plus free shipping and an extra 60 days for returns. If I’m shopping at Target, I’d rather use my RED card.

The best situations for buying discount gift cards:

If you’re buying a gift card for someone as a gift.

If there’s a store or restaurant or website that you buy from very regularly – big box stores like Target, coffee shops, gas stations, and grocery stores are probably the most common examples.

If you have specific plans to purchase something expensive from a niche company (e.g. jewelry, electronics, furniture, airline tickets). That’s where you can really see a savings. For example, I saw a gift card for Anthropologie for a $50 discount off about $530. If you already had plans to buy a piece of furniture for $700, for example, why not get the $50 off?

Gift cards can also be a smart way to budget. I have a friend who buys a $20 Starbucks gift card every month and loads it onto the Starbucks Rewards account on her iPhone app. Once that gift card runs out, no more Starbucks for the rest of the month. Even better, she’s earning points every time she uses that gift card through her app, so she gets a free drink after every 12 she pays for (plus a few other perks and discounts). Now that’s smart!

There are even discounted gift cards for airlines! If you regularly fly a specific airline, why not buy a gift card for a few hundred dollars and use it the next time you buy a ticket?

Other Tricks for Scoring Discount Gift Cards

Buy a full-priced gift card to use any time for discounted goods and services. Groupon frequently has deals for international retailers like Starbucks, Amazon, and Gap. This makes a good gift because the ultimate value of the product or service is more than what you paid for the gift card.

Use a Credit Card with Points or Cash Back

Buy a gift card at full price using a credit card that earns points or cash back.

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